The project will deliver 180 new category C prison places for the Ministry of Justice (MoJ) in three 60-bed, secure houseblocks.
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The houseblocks at HMP Onley will be delivered using a standardised design and construction approach common across the programme, with 65% manufactured offsite.
Wates will also deliver a new workshop for vocational training at the HMP Onley project to teach offenders useful skills to secure employment and reduce reoffending.
Mace and Gleeds are partnering with Wates for the delivery of this project.
Construction on the new houseblocks is targeting completion by the end of 2026, with the houseblocks becoming operational shortly afterwards.
Phil Shortman, managing director (MoJ) at Wates, said: "As the first project in the Small Secure Houseblocks Programme to reach this stage, today’s announcement represents a significant milestone in providing much-needed new prison places."
Fiona Parker, deputy director of the Small Secure Houseblocks Programme at His Majesty’s Prison and Probation Service, said: "This expansion at HMP Onley marks a critical step forward in delivering modern, secure, and rehabilitative prison facilities as part of our wider commitment to increase prison capacity.
"The new houseblocks and vocational training workshop will help ensure prisoners have the opportunity to develop skills that support their reintegration into society, ultimately helping to reduce reoffending and protect the public.”